Indian Gold Book:Indian Gold Book - Gold Bars Worldwide

SUMMARY AND POSITIVE FINDINGS
POSITIVE FINDINGS
Retailers draw attention to many factors that will support demand for gold jewellery over the next decade.
Population. Forecast to increase by 17%.
Economy. Annual GDP growth of 3 - 5% in real terms would grow the economy by 50% or more.
Underground economy. For many families, gold jewellery will continue to act as a discreet, tradable asset.
Exchange control. If it continues, as expected, gold jewellery will remain an important hedge in the event of a rupee
devaluation against the US dollar.
Insecurity. India is not a welfare State. Most people will retain a sense of financial insecurity. Gold jewellery’s role as a
tangible asset will continue to be important.
Cultural tradition. All classes, although the commitment by class may vary, will continue to purchase plain (or studded)
gold jewellery.
Middle class. According to NCAER, the middle class is expected to increase by around 40%. Individual families may buy
less, but the number of middle class families will increase.
Women. For most married women, gold jewellery will remain an important personal asset.
Adornment. The dimension is strengthening. Lighter weight “wearable” gold jewellery is viewed as a new market
opportunity with much potential.
Self-purchases and small family gifts. Both categories are expected to become more important as the economy grows.
Sentimentality. The bulk of marriage-related jewellery is regarded as “sticky” and unlikely to be dishoarded. Although
some is dishoarded, sometimes within months of the wedding, retailers frequently refer to “sentimentality” as a strong
restraining factor.
Rural. An enduring rural commitment to owning gold jewellery is expected to underpin the market. Its proportion of the
population is forecast to change only from 71% to 68% by 2011.
PERSPECTIVE
• India is in a period of transition as it gradually emerges from its Third World status.
Attitudes to owning gold jewellery for “adornment” and “investment” purposes are no longer homogeneous across the
population. Among the urban/rural, rich/poor and young/old, they have started to diverge.
The divergence is the outcome of varying rates of economic and social change among the different population groups.
As a broad generalisation, among the urban, rich and younger populations, the motivation to purchase large quantities
of gold jewellery has weakened.
Among the rural, middle and lower classes and older populations, the motivation to purchase large quantities remains
strong.
• Although cultural and social change is regarded as irreversible, the pace of change will vary greatly among
the many population groups.
For most groups, it is likely to be gradual. It should not be assumed that the attitudes of the urban top end reflect those
of the bulk of the population.
As retailers stress, the primary market for gold jewellery is not the very rich or the very poor, but the emerging “middle
class” (upper middle, middle and lower middle) not only in major cities but also (and especially) in the rural areas.
AN INTRODUCTION TO THE INDIAN GOLD MARKET 21